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Toys R Us to close 180 stores across the U.S.

CNBC logo CNBC 1/24/2018 Lauren Thomas
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  • Toys R Us is planning to shutter roughly 180 stores across the country, or about one-fifth of its U.S. store fleet.
  • The closures are scheduled to begin in early February and run through mid-April.
  • The retailer hopes to restructure and emerge from bankruptcy.

Toys R Us is planning to shutter roughly 180 stores across the country, or about one-fifth of its U.S. store fleet, in a bid to restructure the company and emerge from bankruptcy.

The closures still need court approval, documents show, but management is planning to shut those locations beginning in early February and running through mid-April.

"The reinvention of our brands requires that we make tough decisions about our priorities and focus," Chairman and Chief Executive Officer David Brandon wrote Tuesday in a memo to customers. "The actions we are taking are necessary to give us the best chance to emerge from our bankruptcy proceedings as a more viable and competitive company."

The Wayne, New Jersey-based retailer added that a number of its existing locations will be co-branded as Toys R Us and Babies R Us stores.

Just four months ago and prior to the holiday shopping season, Toys R Us filed for bankruptcy protection as its sales were waning and debt was piling up. The toy chain faces increased competition from the likes of AmazonAMZN, WalmartWMT and TargetTGT, and it's struggled meeting consumers' needs online.

Toys R Us has said it's focused on improving the in-store and online shopping experience and is also planning to revamp its loyalty program to appeal to more consumers.

The company hasn't yet disclosed which locations will be closing in 2018, but Toys R Us' Canadian president, Melanie Teed-Murch, said in a separate memo that the 83 locations in Canada won't be impacted.

In Canada, Toys R Us "will be taking additional steps to improve the overall customer omnichannel experience with compelling promotions, continued improvements to mobile and digital marketing and enhancements to our baby registry and loyalty programs," Teed-Murch explained.

One analyst has already speculated Target is positioned to be the biggest winner as Toys R Us closes some of its U.S. stores, considering the big-box retailer's proximity to the toy chain's locations.

Out of Toys R Us' roughly 880 store fleet in the U.S., 183 stores (including those under the Babies R Us nameplate) have at least one other Toys R Us store within a 15-minute drive, UBS wrote in a note to clients in December. Analyst Michael Lasser said he believed the company would close these "cannibalized" locations before any others.

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